WASHINGTON (Reuters) - Barack Obama might seem an unlikely investor in the firearms industry. But the U.S. president, a fierce advocate for gun regulation, has money in a pension fund that holds stock in gun and ammunition companies.

Although Obama’s stake is minuscule, worth no more than $30, it reflects a much larger surge of investment.

The president is among millions of Americans buying into gun companies - often unwittingly - as mutual funds have increased such holdings to record levels, according to a Reuters analysis of institutional investment in firearms companies.

Since Obama was elected in 2009, mutual funds have raised their stakes to about $510 million from $30 million in the nation’s two largest gun manufacturers with publicly traded shares, Smith & Wesson Corp and Sturm, Ruger & Co. That means such stocks are now common in retirement and college savings plans.

The influx has helped to boost both companies' shares by more than 750 percent during the Obama presidency; each now has a market value of about $1 billion.

Beyond mutual funds, such investments also are held in the portfolios of hedge funds and public pension plans, which are harder to track.

The White House declined to comment on Obama’s holdings in the Illinois General Assembly’s pension plan, which he earned while serving in that state’s senate. The president has disclosed between $50,000 and $100,000 in the plan.

Other indirect investors in firearms companies include advocates for gun regulation in the U.S. Congress and several parents of children who attended Sandy Hook Elementary School in Connecticut - site of the 2012 massacre of 20 students and six staff members.

Fund managers are drawn to the stocks by surging sales. Buyers are arming themselves, analysts said, in response to mass shootings and calls for tougher gun laws.

By the end of 2015, more than 150 mutual funds owned Smith & Wesson shares, up from 53 at the end of 2008, and nearly 130 held stock in Ruger, up from 52, according to data from Morningstar Inc.

It would have taken investors "minimal due diligence" to see massive profit potential in Ruger stock when Obama was first elected, said Ruger Chief Executive Mike Fifer. Shares hit a low of $4.50 the Friday after that Tuesday election; the stock was changing hands today at $61.61.

"Orders at every level of the distribution channel exploded" the week of Obama's election, Fifer recalled. "And continued to do so for months afterward."

AMMO RUSH

America’s leading ammunition maker, Vista Outdoor Inc, has drawn investments from 319 funds in its first year of public trading and now has a market value of $2.9 billion. Its bonds are owned by a who's-who of U.S. investment and insurance companies.

Such investments can be hard to identify within large funds, even with concerted effort. Eric Milgram, a corporate research analyst whose two children were at Sandy Hook Elementary during the rampage, tried to purge his portfolio of firearms holdings. But he gave up after a frustrating search through mutual fund stock lists, holding companies and subsidiaries.

“I’m disgusted with this industry; I don’t want to be invested in it,” said Milgram. But, he added, “There are only so many hours in the day.”

Vanguard Group, the nation’s largest fund company, said it was unrealistic to balance political sensibilities with obligations to meet performance benchmarks.

“It would be exceedingly difficult, if not impossible, to fulfill these obligations while managing portfolios that reflect the social concerns of all our clients,” said Vanguard spokeswoman Arianna Stefanoni Sherlock.

Vanguard does, however, offer a Social Index fund – with about $2 billion in assets out of Vanguard’s total of about $3.4 trillion – that excludes firearms companies along with other stocks involved in an array of ethically sensitive industries.

Smith & Wesson declined to comment for this story. Vista Outdoor did not respond to requests for comment.

SMALL STAKES, BIG IMPACT

Obama and his tiny stake are typical of most Americans with holdings in firearms investments: They are invested in funds that buy shares of the relatively small part of the firearms industry that is publicly traded. But collectively, their investments are a boon to the gun industry and amount to a sizable stake in major gun and ammo makers.

For some gun safety advocates, the amounts are less important than the principle. Po Murray, who put four children through Sandy Hook Elementary, has also struggled to determine whether her investments include firearms companies.

“It’s a real surprise: You find out you could be invested indirectly in Smith & Wesson,” said Murray, who chairs the Newtown Action Alliance, a gun safety group. “I don’t want to be invested in gun companies.”

Until 2014, the pension fund owned about $1.5 million of the debt of Remington Outdoors, another gun manufacturer. Remington did not respond to requests for comment.

The Illinois pension plan also invests in at least one mutual fund with gun industry exposure. The $1.1 billion Templeton Global Smaller Companies Fund owned $9.5 million of Smith & Wesson stock at the end of December, fund disclosures show.

Obama and other plan participants have no say in how the money is invested. That’s controlled by the Illinois State Board of Investment, which said it has no policy on investing in firearm and ammo companies.

In its analysis, Reuters used mutual fund holdings data from Morningstar and Lipper Inc, a Thomson Reuters company, to examine firearms investments during the Obama presidency.

Some of the gun stockholders are passively managed index funds. But many are actively managed, such as Fidelity’s $40 billion Low-Priced Stock Fund, which has become Smith & Wesson’s second-largest mutual fund investor under storied stock-picker Joel Tillinghast. The fund held about 1.1 million shares worth $20 million as of Oct. 31, according to fund disclosures.

Fidelity and Dimensional declined to comment. BlackRock - the world’s largest asset manager with $4.6 trillion under management - manages $200 billion of that total in investment options that screen out certain stocks, including companies involved in firearms, tobacco and alcohol businesses, spokesman Peter McKillop said.

GUN INVESTMENTS IN CONGRESS

Obama isn’t the only gun-regulation advocate with gun-industry holdings.

Former congresswoman Carolyn McCarthy - elected after her husband was killed in the 1993 Long Island Rail Road shooting - pushed relentlessly for gun safety legislation. While in office, she held shares worth between $3,003 and $45,000 in at least three exchange-traded funds with stakes in gun and ammo companies, according to her last financial disclosure before retiring last year. She also invested between $2,002 and $30,000 for two grandchildren in so-called 529 college-savings plans that include a Vanguard fund holding firearms stocks, disclosures show.

The New York Democrat could not be reached for comment.

As a federal retirement benefit, members of the U.S. Congress can participate in a Thrift Savings Plan, which offers an investment option - the S Fund - that holds stock in firearms companies.

Financial disclosures show that S Fund investors include Senator Dick Durbin of Illinois, the second-ranking Senate Democrat and a leading advocate for stricter background checks for gun buyers. Durbin disclosed an S Fund investment of about $115,000.

Durbin's office declined to comment.

Some members of Congress welcome the investment option.

“I’m just grateful the fund managers are investing in something that’s making money,” said Representative Kevin Cramer, a North Dakota Republican who opposes gun restrictions and has a small investment in the S fund.

‘GOOD FOR BUSINESS’

For all the debate, Obama has made no progress in passing tougher gun laws. Measures such as universal background checks have withered in Congress, where the number of anti-gun control Republicans has grown.

Calls for tighter controls have been met with bursts of gun sales, according to U.S. background-check data on gun purchasers. Gun store owners attribute the extra sales to consumers who fear the president will make it harder to buy arms.

“Let’s just say he’s been good for business,” Jack Lesher, manager of Chuck’s Firearms in Atlanta, said of Obama.

Gun sales jumped again recently after the president blasted congressional inaction on gun control and vowed to use executive powers to expand background checks for buyers and bolster licensing requirements for dealers. His announcement followed yet another mass shooting, on Dec. 2 in San Bernardino, California, where a couple pledging allegiance to Islamic State killed 14 people.

For the week that ended Dec. 20, firearms background checks - a proxy for guns sales - totaled 839,109, the second-highest week since 1998. Only the week after the Sandy Hook shootings was higher, according to the Federal Bureau of Investigation.

Vista’s main factories have churned out bullets 24 hours, seven days a week for at least two years, Vista Chief Financial Officer Stephen Nolan told investors in November.

Now the industry is ready for an election-year surge.

“The politics of gun control could stay in the headlines, which we believe could lead to a record year,” wrote Chris Krueger, senior research analyst at Lake Street Capital Markets, in a note to investors in January.

Ruger is boosting inventories to prepare, after learning a costly lesson going into the last presidential election. Demand peaked that year, based on the number of FBI background checks sought for new gun purchases. The surge followed Obama’s re-election and the Sandy Hook shooting.

“When we went into late 2011, we got cleaned out of inventory … even though we increased production dramatically,” company CEO Fifer told investors during a November conference call.